US-China: from trade war to tech cold war; auto tariffs delayed

Amid the US-China trade tensions and tariff retaliations, the two powers are probably also battling in a cold war, via technology. The Trump administration declared a national emergency banning domestic companies from doing businesses with tech firms, potentially including Huawei, that have threats against the US security and technology. Afterwards, the UK and France said that they would conduct their own assessments whether or not to engage with a tech firm like Huawei in building their 5G networks. Responding to the US, Huawei however said that it is willing to work with US authorities to ascertain product security.

Moreover, China has gradually reduced US treasury holdings to the lowest level since 2017, perhaps on currency stabilization not tariff retaliation. Although pressuring up US bond yields and borrowing costs, such reductions of US treasuries have been offset by risk-off investments owing to the US-China tensions freshly intensified. In addition, due to unclear US-China directions, Goldman Sachs have decreased exposure to vulnerable emerging markets.

While considerably busy with China, the largest trade counterpart, the US delayed auto tariff impositions by up to six months as expected, relaxing EU’s and Japan’s worries over trade outlooks.

Although US retail sales and industrial production became worse lately, housing starts and weekly initial jobless claims beat their estimates.

Continuing the downward trends, Singapore’s April non-oil exports was worsening by 10% while the growth was -11.8% in March, compared to the previous year.

Despite rate cuts by some regional central banks (Malaysia, New Zealand, and Philippines), Indonesia’s central bank (BI) has held the policy interest rate steady at 6% and would continue monitoring the externalities.

Moving between 31.65-31.68 this morning, USDTHB could be between 31.6-31.7 today.